Via Technologies to acquire Cyrix

TAIPEI, Taiwan  Via Technologies Inc. and National Semiconductor Corp. have signed a letter of intent for Via, a Taiwan chip set vendor, to purchase Cyrix Corp., National's X86 PC processor business, for an undisclosed amount. Details on the timing and structure of the transaction, announced Tuesday (June 29), will be announced over the next month.

The initial announcement by the companies came just before National, who had said he would shut Cyrix down if a buyer was not found for it by June 29. What Via will do with Cyrix is not yet clear. But motherboard manufacturers and analysts in Taiwan said it will give Via a stronger position in its developing battle with Intel Corp., which sued Via earlier this month for contract violations regarding Via's P6 bus license with Intel. The suit has made some motherboard makers in Taiwan hesitant to use Via's chip sets.

Via should have no problem raising the cash to buy Cyrix, analysts said. "Via just became a public company and so has plenty of cash," said one financial analyst. "Also the Wong family [which holds a major interest in Via] will be happy to invest into Cyrix. They'll be the first Taiwanese company to have a CPU vendor. That's big face here." The Wongs of Taiwan are considered one of the richest families in Asia.

Intel's recent suit against Via revokes Via's right to sell any chip set that uses the Intel P6 bus. When news of the suit hit Taiwan last Friday (June 25), Via's stock price fell 10 percent, the maximum permitted on a single day of trading.

More importantly, Intel's suit has scared away some of Via's major customers and halted Via's plans to introduce PC133 chip sets. "We definitely will not be using any Via chip sets in the near future," said an official at one of Taiwan's largest motherboard makers. "We would like to offer PC133; in fact, we are pushing Intel to offer it. Our distributors though will not want anything to do with Via-based boards for now."

Other mainboard manufacturers said Intel's lawsuit has effectively shut Via out from a major portion of the market. "Our smaller customers won't want Via chip sets for now," said another mainboard maker. "Maybe the top four U.S. OEMs can still use Via since they have their own license agreements with Intel. Also, the small Taiwanese mainboard makers might still use Via. They are kind of below Intel's radar."

Some mainboard makers in Taiwan said they believe that Via brought the suit upon itself. "Their aggressive marketing of PC133 was a disaster," said an official at a major mainboard maker. "They were just asking for Intel to respond. Acer Laboratories Inc. on the other hand was much smarter. They just quietly offer us products. They don't advertise that they are going up against Intel."

Analysts here said Via's purchase of Cyrix will give the company a long-term position. "It is kind of a security blanket for Via," said one analyst. "When Intel introduces Timna next year, Via will be in a position to offer an alternative product."

The Timna processor, now in development at Intel for the low-end PC market, and set for introduction late next year, will integrate graphics and north bridge logic. Via has already integrated north bridge logic and graphics into chip sets, and now the Cyrix acquisition will provide it with access to CPU technology.